Calgary, other cities face municipal grant shortfalls

Jason Markusoff, Calgary Herald03.08.2013

Mayor Naheed Nenshi suggested the city may have to hike property taxes to make up for the failure of the provincial government to increase funding through a key grant program in Thursday’s budget.Greg Southam
/ Edmonton Journal

Alberta’s key municipal grant that funds many infrastructure projects will stay under $900 million annually for the next three years.Calgary Herald/Files

Calgary property owners may have to pay more taxes to help cover a cash gap created by yet another shortchanging of Alberta’s key grant program to municipalities, Mayor Naheed Nenshi said Thursday.

Previous provincial budgets indicated Calgary and other cities would likely get more than $1 billion this year in the Municipal Sustainability Initiative, the landmark program that funded Calgary’s west LRT and a slew of other projects. Instead, the provincial budget kept the grant flat at $896 million, where it’s been for several years.

This latest plan breaks a Tory election promise to hike annual funding of MSI to $1.6 billion by the 2014-2015 budget year. Cities and towns will instead be asked to accept half that.

In his budget speech, Finance Minister Doug Horner proclaimed the government is “maintaining” the MSI grants, and showing its commitment to local infrastructure investments.

“The premier has continued to make it clear: we will not be balancing the budget on the backs of municipalities,” Horner said.

It’s true the Tories haven’t balanced the budget in 2013. But the backs of municipalities will feel the burden of either delayed projects, or further borrowing to cover the gap between what they were supposed to get and what they are getting.

The Tories had long ago admitted they would have to stretch out the MSI program beyond 10 years. The latest budget figures make clear the government will have to stretch it out even further, prompting municipalities to either delay projects or borrow more heavily to cover off shortfalls.

Because the city has planned projects such as the LRT, new police headquarters and rec centres based on the Stelmach government’s plan of 10-year “predictable” funding, Calgary has already had to redirect seven per cent of the MSI program to costs of borrowing money.

With $3.3 billion of Calgary’s MSI grants already spoken for, it’s unclear how the city can afford to cover further borrowing costs.

“The interest has to be borne by the city budget somehow, and whether it’s through deferred capital payments or the operating budget — which is paid for by property taxes — who knows” Nenshi said in an interview.

Calgary originally expected to get $407 million per year starting in 2010. Instead, it hasn’t ever received more than $257 million, and gets $254 million this year. Those numbers aren’t projected to go up through 2015, which is Year 9 of what was initially supposed to be a program fully paid out in 10 years.

By the ninth year, the province will only have granted $6.6 billion of its $11.3-billion promise, first made in 2007 when Ed Stelmach was premier and Dave Bronconnier the mayor.

“I know municipalities will be disappointed we haven’t grown it faster,” Municipal Affairs Minister Doug Griffiths said of the hard-news budget.

“But I know those same municipal councillors will say, ‘I didn’t want you to take another $600 million out of education or out of health care or something to do it.’ From what I’ve seen so far, they’re going to be quite happy that we can hold the line at all.”

On the projects front, having a transportation minister from southeast Calgary — former alderman Ric McIver — hasn’t yielded major dividends to Calgary, yet. There aren’t new transportation projects in the budget for Calgary, beyond a long-awaited upgrade of the Macleod Trail-Highway 22X interchange that ties into the ring road’s new southeast leg.

A $40-million upgrade of the Deerfoot freeway’s Glenmore “squeeze” wasn’t included in Alberta’s three-year capital plan.

Road works elsewhere in the province will slow down. The Alberta Urban Municipalities Association protested a $98-million cut in transportation grants for municipalities and provincial roads and bridges.

“It’s a big hit to transportation, those dollars we use to repair those potholes that are pounding your car, upgrade roads and keep your sidewalks safe,” said North Darling, the group’s vice-president and Peace River’s deputy mayor.

Nenshi bemoaned an apparent $5-million cut to Calgary’s policing grant, but city coffers will benefit from the new cellphone fee that goes to 911 call centres.

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